Orlando, FL 2/1/12 (StreetBeat) – AOL’s (NYSE: AOL) success in boosting its display ad revenue for the third straight quarter sent its stock up 4.5% in pre-market trading.AOL still saw profits drop precipitously. Fourth-quarter net income fell 66% to $22 million or 23 cents per share. Revenue declined 3% to $576.8 million.
Some goods news though: Wall Street expected greater revenue losses with EPS closer to 20 cents. And this was the lowest rate of total revenue decline in five years, AOL said.
AOL has tried to supplement its faltering subscription service with acquisitions of TechCrunch and The Huffington Post. By selling ads through these new media portals and on its homepage, AOL’s advertising revenue climbed 10% to $363.8 million. AOL’s new hyper-local news network, Patch, reported its traffic, advertisers, and ad impressions grew 100% year over year.
“AOL took a large step forward in Q4, and I am very pleased with how we ended the year,” CEO Tim Armstrong said.
For the year, AOL saw profits return after a terrible 2010. Net income reached $13.1 million or 12 cents per share—up from a loss of $782.5 million a year ago. Revenue dropped 9% to $2.2 billion. Ad revenue was up though, reaching $1.3 billion from $1.2 billion a year ago.
Both domestic and international demand fueled the growth of its display ad revenue, which totaled $148.2 million. Search advertising revenue fell to $88.4 million, and AOL subscribers continue to jump ship with subscription revenue falling to $194.6 million.
While AOL tries to revamp its business model to focus on display ads, it faces stiff competition from Facebook, Google, Microsoft, and Yahoo!. Building to what may be the largest U.S. Web IPO ever, Facebook is now the leader in display ads, and now accounts for 28% of all U.S. display ad, according to a new report from comScore.
AOL was trading at $17 before the opening bell. Google, Microsoft, and Yahoo were little changed.
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